The Grain Report - AUSTRALIA FLOODS

AUSTRALIA FLOODS............ We started the week Tuesday with our Monday weekly export inspection report, delayed one day. Wheat inspected for near term export came in at 21.6 million bushels down from 25.5 the week prior and over our four-week average of 18.5. Not a good demand number on the week. But, Tuesday's trade suggest may be some panic buying may set in. Australia announced over the weekend that continuing floods have created their worst economic disaster ever. That rails that ship grains from field to port are underwater and may be out of service for three months. That essentially takes them out of the near term export scenario as by mid April people will be talking about U.S., Canadian and European winter wheat coming to harvest in May. Well, this had Algeria and Turkey enter the world market for 775,000 metric tons of wheat as there's no guarantee that spring foreign ports will have any better production. We saw panic buying when the Russian drought hit, but it faded fast as world supplies were big. The US and world ports have no shortage of wheat yet, so panic buying seems a stretch but let's watch demand closely. Corn inspections were to 20.5 million bushels versus 21 the week prior and four-week average of 32. We need 30 to 39 to be friendly and 40+ bullish. So, not a good demand number. Bean inspections were 43.1 million bushels up from 38.7 the week prior and four-week average of 31.5. Good number, with China in for 25.6 of the total and a increase for them the second consecutive week. It could be weather related as Argentina saw good weekend rains with more expected Wednesday. This had us close lower Tuesday. But, WXRISK.COM the weather site sees a heat dome into the weekend and hotter and drier conditions into months end. Importance to beans are that while corn is finishing key yield development time beans are getting started. Though futures traded the rain in front of it, China's trading the long-term uncertainty. Beans went from trading bearish weekend weather with Tuesday's lower close to the long-term bullish weather on a higher opening Wednesday. But, Wednesday was a little stronger after the opening on a reminder the Chinese bosses are in Washington this week cutting trade agreements. On Thursday their to sign another grain deal for long term purchases. That can't be bearish, but will there be any surprises. Two years ago when they were here and signed the last trade agreement, it was also announced that day they purchased 2 million metric tons of beans. Some will wonder if a similar huge purchase will occur again. The surprise could be they walk away with a big corn purchase as 2011 is to be potentially China's biggest corn purchasing year. Chartist will look at today's higher corn opening and sharp sell off as a key reversal. Some still are looking at the last two years where corn and beans sold off the last two weeks of January and first two weeks of February as a looming probability. There's a lot of emotions in the market as well as long profits to take out. Last thoughts on demand. China might want to load up on grain ahead of the start of their big national holiday February 3. So, beware. Wednesday's closing technicals read like this. March corn support is 6.16 with resistance at 6.80. March beans support lies at 13.95. Then 13.70. Resistance is 14.85. March wheat support lands at 7.90 then 7.70. Resistance is same old, same old at 8.10. A close over 8.10 and 8.65 is next